To continue to mitigate against the devastating economic effects of COVID-19, Freddie Mac provided further relief for multifamily landlords and tenants by revising its existing Multifamily COVID-19 Forbearance Program (Forbearance Program) in response to the enactment of the CARES Act. Under the existing Forbearance Program, property owners with a fully-performing Freddie Mac Multifamily loan can defer their loan payments for 90 days by showing hardship as a result of COVID-19 and by obtaining lender approval. In exchange, Freddie Mac originally required no evictions for nonpayment of rent during the forbearance period, which was conditioned on a tenant demonstrating that their non-payment was a result of COVID-19-related hardship.
Freddie Mac revised the Forbearance Program as follows:
- Extension of Forbearance Program: The Forbearance Program originally expiring in August 2020, is now available until the earlier of (a) the end of the federally declared emergency period, or (b) December 31, 2020.
- Updated Evictions Prohibition: Property owners that enter the new Forbearance Program are restricted from evicting, giving notice of, or starting an eviction of any tenant for nonpayment during the forbearance period, thereby removing a requirement that tenants have to demonstrate their non-payment is due to COVID-19 related hardship and clarifying that property owners cannot start the eviction process during the forbearance period.
- Prohibition on Late Fees and Penalties: Property owners that enter the new Forbearance Program are prohibited from charging late fees, penalties, or other charges under a tenant lease related to a tenant nonpayment of rent during the forbearance period, as required by the CARES Act.
Something to keep an eye out for in the coming days and weeks is whether Fannie Mae will follow in Freddie Mac’s footsteps. Fannie Mae’s Multifamily Forbearance Program is currently set to expire on August 31, 2020.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.